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Prime Time

By Mark Revington

Tuesday 1st February 2005

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If genes count for anything, then Prime Television chief executive Chris Taylor has the code for success. His father worked for 22 years for Kerry Packer's broadcasting interests in Australia and his mother starred in the Australian soap, The Young Doctors, for eight seasons.

His parents met in Adelaide, says Taylor. "And the story goes that dad moved to Sydney, I think as programme manager of Channel Nine, and mum followed and started in Young Doctors, which she did for eight or nine years until she gave that up to look after me."

Taylor may have had the pedigree but when he left school it was to become a tennis pro. It didn't work out - he says he was too much of a homebody to put up with the travel - and he ended up in television anyway, on the fast road to success. Taylor was just 31 when he became chief executive of Prime New Zealand in November 2003 and has since shown a flair for attracting both publicity and some big signings.

In just over a year, he has transformed Prime from a loss-making regional station into one poised to take on TVNZ and CanWest in the free-to-air television stakes. Or so Taylor hopes. Prime made its first-ever profit in October and November last year, boosted by pre-Christmas ad spending. Revenue rose by 70% in the year ending June 30, 2004, while costs were cut by 34.2%, and Taylor made some headline-grabbing hires. As he says, the groundwork has been laid. Will ratings and revenue follow?

Television advertising revenue has been rocketing up across the board, with a 14.7% increase across all channels in 2003 to a record $592 million, according to the Television Broadcasters' Council. And it jumped again last year, with an increase of 12%, taking total advertising revenue for the 12 months ending September 2004 to $634 million.

To be up there with the big players, Taylor will need to grab a much larger audience than the 6% share Prime, with its curious mix of Aussie news and drama and shows like the BBC's Top Gear, had been attracting, according to Taylor. Ideally he'd like Prime to get an audience share in the 20s.

Holmes away from home
Getting Paul Holmes across to Prime from Television New Zealand after 15 years was a bold move, one that Taylor and board chairman Brent Harman believe will give the station the vital early evening platform that television networks need to take a big audience through to prime time.

But there's plenty of debate on whether Holmes can pull a big enough audience. With TV3 launching its own current affairs show fronted by John Campbell, TVOne going with Susan Wood, and Holmes at Prime, the 7pm slot is getting a little crowded. Harman and Taylor say Holmes will deliver the goods.

"We see Paul as being instrumental in doing that for us," says Harman, who as general manager of Newstalk ZB hired Holmes to take on the Auckland radio market in 1987. Others aren't so sure. Nigel Keats, media director of Clemenger BBDO, notes that TVNZ has increased its February 2005 advertising rates in the 7-7.30pm time slot by 28% to $6,995 for 30 seconds. Compare that with the Holmes rate on Prime in February at $1,800 in the same time slot. "For that rate we think they will be expecting an audience of around 5% to 7%, considerably less than Holmes rated on TVOne," says Keats. (Holmes had an average weekly rating at TVOne of 18% among all viewers over five).

Martin Gillman of Total Media believes Holmes and the attendant publicity over his move may take Prime up to an 8% share. "But our forecast is that TVOne will continue to win the 7pm time slot."

Taylor says he's bemused by his competitor's price increase, given that TVNZ will face competition from Holmes on Prime, and TV3. "Why would you choose to increase that time slot more than anything else given that it's the one that potentially stands to lose the most? I don't get it."

Last year was a good start for Taylor, with the 5.30pm news bulletin fronted by Suzie Aitken drawing audiences of around 40,000 when it began. Television New Zealand news boss Bill Ralston condemned Prime's nightly bulletin as a "rip and read service" in questioning Prime's commitment to local news and current affairs but Taylor insists it did well for a startup operation and says Prime will improve it over time.

He hired industry veteran Andrew Shaw as programme director, lured Holmes with a three-year deal, Alison Mau from TVOne's Breakfast to be a senior reporter and stand-in host on the Holmes show, and along the way put together under-the-radar deals like the free-to-air rights for New Zealand Cricket's international summer season. Total Media's Gillman points out that acquiring the cricket rights was an especially smart move, despite the Black Caps' patchy showing in the tests against Australia at the beginning of summer. One-day matches hold an audience over long periods of time.

Other deals are rumoured, including Coronation St's move from TVOne to Prime. All Taylor will say is that Prime is looking at anything and everything. "With all the hoo-ha in the market about what Prime is doing, everyone is getting a bit carried away. We really have no comment to make about Coronation St or any other output deals that are on the verge. I think things have been blown out of proportion a little bit."

Taylor last year predicted that Prime should be the major network in this country within five to ten years. It was a bold call, given that Prime had just posted a $6 million loss for the previous year and by that stage had lost $66 million since starting out in 1998. "I think that should have been could," he says. "But yeah, the aspirations are for us to be the number one network and I do think it's possible. A lot of things will have to go right - I said that before we got Holmes and that was one of the things that I was obviously hoping would go right, but there are a lot of other things along the way that will also have to go right." Just what those other things are Taylor is not yet willing to reveal.

The gamble
The young chief executive hasn't been afraid to spend money to try to turn Prime around. Holmes alone is reportedly on a million-dollar-a-year package, including bonuses, with millions more to be spent on putting his show together.

And although Taylor is loath to say exactly how much his war chest contains, it was a choice the board made at the time of the Holmes decision between shoring up losses and turning Prime into a solid, if unspectacular, earner - or betting the house.

"I could have easily got this station to a point where it got an eight or nine [percent] audience share and we made a couple of million a year and they might have been happy to hang in there. But everyone unanimously feels that if we're going to do this, we're going to compete in this game and try and show the sort of results that TV3 shows now."

After completing the cost cuts, Taylor says Prime is now a growth proposition. "You've got to make sure every investment you make has the potential to return for you."

Holmes got the headlines but Shaw was an important, tactical acquisition. A former head of production at TVOne and TV2, and head of programme acquisitions for TVNZ, Shaw, who had been working as chief operating officer at South Pacific Pictures, is known for his experience and contacts around the world.

"It made the industry stand up and take notice," says Nigel Keats who describes Shaw's first programme schedule for 2005 as solid and pretty respectable. And while Taylor professed to be taken by surprise by the fuss over the Holmes' move, equally, perhaps disingenuously, he says he hadn't really appreciated the significance of Shaw's arrival.

"He had been doing some consulting for us and my predecessor had said, 'you should stay in touch with this guy, he's a good bloke, he understands the market'. I was pretty delighted when we got him but everyone else probably appreciated it more than me. The reaction to his appointment took me back a bit. Everyone was going, 'Oh this is huge for you guys'."

The journey
There's a lot at stake professionally for Taylor in taking Prime to new heights in New Zealand - it is, after all, his first chief executive role.

He grew up in Sydney, and spent a year on the professional tennis circuit after leaving school. He was initially based in Florida while he played US tournaments, toured Europe and returned home to play the Australian circuit - saying he missed his family and friends too much.

Until then, television hadn't really been in the frame, according to his father, Lynton Taylor. "He really didn't have a focus on what to do other than the tennis circuit when he left school. He almost resisted TV. He definitely didn't have any interest in programming and production which is the way I came through."

So Taylor completed a Bachelor of Arts at Sydney University, and then joined the Nine television network as a fledgling sales rep. The Nine network, owned by Kerry Packer's Publishing and Broadcasting Limited (PBL), dominates Australian free-to-air television and provides good training, says Vance Lothringer, the network's director of sales and the man who hired Taylor. "You have to learn well here or you're out the door. We've got a lot of good people who work here and I guess that's one of the good things about being here - you pick up good habits."

According to Lothringer, Taylor was always destined for a management role, right from the start when he asked the company to put him through an executive MBA course (he has yet to complete his thesis, which has to be work-related, because every time he got close to a topic, says Taylor, he got moved around to a new position).

"He knew what he needed to do to achieve," says Lothringer. "Now whether his father had been prodding him to do it, I don't know, but he put the hard work in. We were always going to put him in management somewhere."

Aiming higher
Prime Television NZ, a wholly-owned subsidiary of Prime Television, began in 1997 when United Christian Broadcasting sold its UHF frequencies to Prime for $4.15 million, a price considered high at the time, and now thought obscene, says Taylor. Prime went to air in August 1998, aiming for between 7.5% and 10% of the audience, but it has since hovered at between a 5% and 7% share.

Current board chairman Brent Harman, who is also chief executive of Prime Australia and a former chief executive of TVNZ, believes the network's Australian owners underestimated how hard it would be to break into the New Zealand marketed a special aerial or to be tuned in through Sky. The result was that Prime could only reach around half of Kiwi homes. "It took time to get traction and Prime's early years were spent trying to proliferate the number of UHF aerials," says Harman, who insists the UHF frequency is no longer an issue.

Prime says it now reaches 95% of the country and almost 80% of the population. It has complete coverage in metropolitan areas, which are the ones that matter to advertisers, and most rural areas. "Our good programmes will have 250,000 people watching and we've had up to half a million," says Harman.

Others have their doubts. Total Media's Gillman believes the UHF transmission will hold Prime back while TV3 chief executive Brent Impey says Prime may have good coverage in metropolitan areas but that doesn't mean everyone has tuned in.

"The signal beams out okay but not everyone has an UHF aerial or has tuned to Prime. It's a handicap for them if they're trying to reach the level of TVOne, TV2 and TV3," says Impey.

In 2001, while Prime lost more than $10 million, it did a deal with Australia's Nine Network in which Nine provided programming, a chief executive, and the option to buy 50% of Prime New Zealand.

Prime needed a strong partner, says Harman, and the deal gave Prime the programming muscle and know -how of Nine and an opportunity to grow the company. Taylor's moves last year are the logical extension of that.

"When the deal was first done, it was certainly on everyone's radar at Nine," says Taylor. "This was an opportunity for Nine to develop a new revenue stream which was obviously greeted with a degree of excitement."

His brief is to grow the company. He knew there was no local programme production, but there was an opportunity to become a mainstream player. "They have an option to acquire this place so would watch with interest. That was pretty much it. I think PBL is very good at saying, 'This is the job, this is where it fits into our scheme, you know what to do and if you don't, you won't be around very long'," says Taylor.

He delivers the last line with a laugh, but talk to anyone about Taylor and they'll say he's driven to succeed. He characterises himself as a commonsense chief executive who gets on with people, within reason. "You need to have an element of rat cunning but I see business in a very simplistic form. You need to have commonsense and you have to be good with people. The better businessman you are, the better you are in those two facets. Anything else can be learnt."

Harman describes Taylor as a bright, smart executive with a good feel for television. "He comes out of what is arguably the finest commercial television broadcaster in this part of the world. You don't get to a senior management position at Channel Nine without being bloody good."

Will that background be enough? Taylor comes from the dominant player in an extremely competitive market, a culture far removed from Prime NZ. In some respects, that will make it easier, says Lynton Taylor, because the risk doesn't seem the same. At Prime, there's not much to lose and plenty to gain, although that scale slides both ways. Here Taylor is betting the whole house. At Nine, the kind of money being thrown about here would hardly raise an eyebrow.

But as Harman points out, the pot of gold has to be pretty good, given that Prime has lost $66 million so far.

"It's certainly fair to say that the Australian owner of Prime, Prime Australia, has demonstrated its commitment to staying in the market. That's a lot of money to invest in something but we're now seeing it coming right. But there's never been any doubt that it's a good business to be in."

Taylor says Prime deserves a place in the market and he will make darn sure it gets there. And meanwhile, on a personal level, "I pinch myself because it's so much fun. It's really exciting doing what we're doing at the moment. In terms of pure job satisfaction, I couldn't ask for more and I think I'm very lucky in that respect."

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